Hua Li of ByteByteGo has a great article on how Plaid works and adds value. There is a need for Plaid analogues in every country's banking system. We have already made one investment in a Plaid analogue in South Asia and we are actively looking for similar opportunities. We like this fintech model because: 1. It works with the banks instead of competing with them 2. It is a natural monopoly / oligopoly - how many companies do you think banks will let into their systems? #Fintech #Banking #EmergingMarketsAngelInvesting #AngelInvesting
FinTech Consulting, Training & Content Strategy｜500k+ Newsletter ｜Founding Member at ByteByteGo｜Executive Director in financial sector｜Director in internet industry
?? Accessing users’ bank accounts efficiently is crucial to many FinTech apps.? How is the business valued at $13.4 billion? ?? The diagram below shows how Plaid works. Step 1 - Bob opens a FinTech app and links his bank accounts using Plaid plug-in. To do this, Bob needs to select a bank first, then enter the credentials for the bank.? Step 2 - The credentials are sent to the bank for verification. Step 3 - Depending on the use cases, the bank returns with various account information including balances, transactions, payroll, and asset history. Step 4 - The information is shared with the FinTech app and now Bob can use the financial services provided by the app.? ?? 6 common use cases are listed in the diagram, where Plaid helps consolidate information and analyze users’ financial health. FinTech apps pay a fee but the users don’t have to pay any fee. ?? The beauty of this business model: It does the heavy lifting for most FinTech apps so that they can focus on financial services themselves instead of talking to various banks with different communication protocols. Time-to-market is significantly reduced. Once a large number of financial institutions connect with Plaid, the network effect is tremendous, hence the high value. For example, a FinTech app can access all of Bob’s bank accounts to make a better profile of Bob’s financial status. ?? Can you think of other innovative examples like this? Disclaimer: I came across this company during work and found it interesting. Hope this can help with idea generation. This is not an ad! — + Click Follow for more Payments Illustrations. Hua Li + Click the ?? on my profile? #systemdesign #payments #banks #innovation #fintech #financialservices .
